Search engines are looking to local search advertising for growth. Unless the engines make one big change, they won't find it.
At the recent Search Engine Strategies, Yahoo launched the latest missile in the war to dominate local search. Yahoo Local asks users to visit a special search page and type in both a search term and a geographic indicator, such as a Zip Code or city name.
Yahoo Local is basically just Google Local, which launched back in March, with a different background color. And that's not necessarily a compliment: Neither Google Local nor Yahoo Local can find more than one bike shop within a mile of my house. I know for a fact there are at least four.
If local search doesn't work that well, why's it getting so much attention from search engines? Because they know search advertising is starting to mature, and the huge growth we've seen for several years is starting to slow down.
In 2003, the search marketing industry grew by 65 percent to $1.9 billion. This year, it'll grow by 34 percent to $2.6 billion. In 2009, the industry will grow 11 percent to $5.5 billion. Those are all very big revenue numbers and very respectable growth rates. But with Google poised to go public at any moment and Yahoo already struggling to please investors, declining growth rates don't look good. The engines need to find new growth sources.
Problem is, as things stand local search doesn't look like it can provide the growth Google and Yahoo are looking for. According to our latest Jupiter Research Paid Search Forecast, local search marketing will generate $502 million in 2004. That's just 19 percent of the total search marketing spend. Local search spending is actually growing more slowly than the rest of the industry. In 2009, local search will bring in $879 million, or only 16 percent of the total search marketing spend.
Two primary factors keep the local search market from taking off. First, consumers aren't searching locally. The local search tools on the market are pretty underwhelming at this point. Most users could replicate my bike shop example in their own neighborhoods, with pizza parlors, barbershops, or any other business type. As a result, consumers aren't searching. Only 4 percent of searchers say local search availability attracts them to a search engine, ranking it among the least-demanded search engine features. When consumers do use local search, it's mostly to find known merchants, not discover new ones.
Second, the biggest local advertisers aren't online. The Yellow Pages, which controls a big part of offline local ad spend, is dominated by physicians, restaurants, and automotive repair. These businesses really don't know how to advertise online. They don't want click-throughs or online leads; they want phone calls and foot traffic. Until search engines can deliver offline leads, local search marketing doesn't appear very attractive to these advertisers.
What can the engines do to make this market grow more quickly? They must make lots of changes. They have to build the local databases so I can find all the bike shops in my neighborhood. And they must find a way to drive offline leads to local advertisers.
But the first, most important change has to be putting local search on the home page. All search engines, particularly Google, hate the idea of changing their primary search boxes. But if they expect consumers to use local search tools, they must make those tools easy to find and easy to use. After years of typing www.google.com and www.yahoo.com, users won't likely flock to brand-new URLs to conduct local searches. The engines will have to buck up and put that second geographic search box on their home pages if they want consumers to search this way.
Without that one big change, local search will never take off, and search engines will never find the growth they crave.
Want more search information? ClickZ SEM Archives contain all our search columns, organized by topic.
On the heels of a fantastic event in New York City, ClickZ Live is taking the fun and learning to Toronto, June 23-25. With over 15 years' experience delivering industry-leading events, ClickZ Live offers an action-packed, educationally-focused agenda covering all aspects of digital marketing. Register today!
Want to learn more? Join us at ClickZ Live San Francisco, Aug 10-12!
Educating marketers for over 15 years, ClickZ Live brings together industry thought leaders from the largest brands and agencies to deliver the most advanced, educational digital marketing agenda. Register today and save $500!
Gartner Magic Quadrant for Digital Commerce
This Magic Quadrant examines leading digital commerce platforms that enable organizations to build digital commerce sites. These commerce platforms facilitate purchasing transactions over the Web, and support the creation and continuing development of an online relationship with a consumer.
Paid Search in the Mobile Era
Google reports that paid search ads are currently driving 40+ million calls per month. Cost per click is increasing, paid search budgets are growing, and mobile continues to dominate. It's time to revamp old search strategies, reimagine stale best practices, and add new layers data to your analytics.
June 10, 2015
12:00pm ET/9:00am PT